Microsoft has priced its Virtual PC 2004 at $129 (£77), and developers will get the virtualisation product as part of their Microsoft Developer Network (MSDN) subscription.

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Virtual PC allows users to run multiple operating systems on the same computer simultaneously. It supports most x86 compatible operating systems, including Linux, although it is optimised for Microsoft's own Windows software and the IBM OS/2 operating system, according to Carla Huffman, product manager for Virtual PC at Microsoft.

Virtual PC 2004 is built on Virtual PC for Windows, one of three virtualisation products Microsoft bought from Connectix in February. The $129 estimated retail price for the Virtual PC 2004 is a drop from the $229 Connectix price.

The competing product from VMWare, VMware Workstation, is priced at $299 (£179) when delivered online, or $329 in a box. An upgrade version costs $99, according to the VMware website.

Virtual PC 2004 is expected to be widely available before the end of the year.

Microsoft will market Virtual PC 2004 mostly to enterprise users as a way to run older legacy applications on newer Microsoft Windows XP Pro systems and to developers to make it easier to test Windows applications, Huffman said.

As a result, Virtual PC 2004 will offer less support for non-Microsoft operating systems than the preceding Connectix product.

The Connectix product had a wizard for default settings for a number of guest operating systems that compete with Windows, including Linux. Virtual PC 2004 only lists various Windows versions and OS/2, plus "others". Selecting others will set up a standard virtual machine that should work fine for Linux, Huffman said.

"Microsoft looks at Virtual PC in a very narrow way," said Greg DeMichillie lead analyst at research firm Directions on Microsoft. VMware continues to be the better virtualisation product, according to DeMichillie.

"Microsoft acquired Virtual PC and I think most people who looked at the two products prior to the acquisition would have said VMware had the better product and that is still true, this release is not a huge change from the previous release," DeMichillie said.

In August, Microsoft launched Virtual PC for Mac version 6.1. Virtual PC for Mac allows Mac users to run various versions of Windows.

Virtual Server is being finalised and is scheduled to ship in the first quarter of next year, a slight delay from the original plan to release the product in the final quarter of 2003.

Virtual Server software lets users run different operating systems on a single server. One use of the server product is to help users migrate from Windows NT 4.0 to Windows Server 2003.

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